Social Security Number vs. International Tax Identification Number
International fellows are required to have a Social Security Number (SSN) or, if you are not eligible for an SSN, an Individual Taxpayer Identification Number (ITIN). Information and directions to the closest Social Security Administration Office are found here. More information about how to apply and an application are also available. If you do not have an SSN or ITIN (note: By law, no individual can have both an ITIN and an SSN), information about applying for an ITIN is available from the Internal Revenue Service. It is essential to inform your Division Administrator of the date of your application since the Smithsonian is required to record this information. If you do not apply for an SSN or ITIN, your stipend paycheck may be suspended.
Tax Reporting and Withholding
The following information has been prepared to explain the tax reporting and withholding obligations for visitors, scholars, researchers and fellows at SAO. Payment of U.S. Federal and applicable state and local income tax is a personal obligation of each person who receives fellowship income from SAO, and funds provided under the appointment (e.g., stipend, research, certain travel allowances, medical insurance premiums paid by SAO) might need to be reported as income. It is the fellow's responsibility to maintain his/her own accurate records regarding these amounts, to be able to determine that portion of the award which is taxable, to report such amounts on the proper forms, and to pay all required taxes to Federal, state and local entities. Since tax liability varies on a case by case basis, SAO cannot give advice with respect to an individual's taxes. You should consult with the Internal Revenue Service (IRS) or a tax consultant to determine your particular tax liability.
Research-related expenses for a Smithsonian fellow may be taxable to the fellow if they only benefit the fellow and there is no benefit to the Smithsonian. In most cases, SAO considers that the fellows' activities provide a benefit to Smithsonian and to the fellow's Smithsonian research advisor and/or research group. Please see your division administrator or his/her delegate for further information.
Please note that all fellowship recipients are expected to file tax returns. If you did not receive any income during the tax year, you must check with the IRS or the Massachusetts Department of Revenue about any reporting obligations.
- A. United States Citizens or Residents
- B. International Visitors
- C. International Fellows Who Pass the Substantial Presence Test
- D. State Tax Information for All Fellows
- E. Social Security Tax
- F. Reporting Foreign Bank Accounts
- G. Annual Tax Forms Issued from SAO
- H. Tax Deadlines and Web Resources
Income tax is not withheld from awards to U.S. citizens, permanent U.S. residents, or non-residents who have been in the U.S. long enough to be considered US residents for tax purposes (i.e., they have met the Substantial Presence Test [see Section C below]). You may wish to refer the IRS Publication 520, "Scholarships and Fellowships," which may be obtained by calling 1-800-829-3676 or from the IRS website.
Although income taxes are not withheld from payments to U.S. citizens or resident aliens, you may be required to file quarterly estimated withholdings of Federal income tax. IT IS YOUR RESPONSIBILITY TO FIND OUT IF YOU ARE REQUIRED TO MAKE QUARTERLY ESTIMATED PAYMENTS USING FORM 1040ES. A PENALTY CAN BE ASSESSED BY THE IRS IF QUARTERLY PAYMENTS SHOULD BE MADE AND ARE OVERLOOKED. More information can be found on the IRS website. Additionally, you should check the Massachusetts state website to find out if you are required to make quarterly estimated payments of Massachusetts state income taxes.
Stipend recipients who are U.S. citizens or residents will not receive an IRS tax form reporting the amount of taxable income. Please note that W-2 forms are not issued to recipients of stipends. But stipend awards are considered taxable income, and you are responsible for including your award in your income tax return for each full or partial tax year during which you are on a Smithsonian fellowship appointment. If you will receive your payments by direct deposit, your bank records may help you to document the payments made during each year. If you enroll in one of the health insurance plans through the Office of Fellowships and have the monthly premiums deducted from your award, we can assist with documenting how much was paid by SAO for medical coverage, which is still considered part of your taxable stipend award.
SAO will issue you by mail an unofficial financial statement by March 31st for the previous year. Even though the unofficial statement is not required to be provided to the IRS, you are still responsible for paying applicable taxes, including estimated quarterly taxes if due. It is important to retain copies of the award agreement and of checks or the electronic pay stubs from stipend payments for tax records.
U.S. citizens and residents are required to file Federal and state income tax returns by April 15th.
As a general rule, awards made to nonresident aliens are subject to withholding of Federal and state income tax. This required withholding can be as high as thirty percent unless an international visitor is in the United States on a J or F visa. For researchers or students on J or F visas, the rate of tax withholding is limited to a maximum of fourteen percent. Although tax withholding is intended to approximate the actual taxes that will be due, when the visitor files an individual tax return, it is possible that additional tax payments may be due or you may be entitled to a refund. Elimination or reduction of tax withholding and tax liability may be available for those international visitors who are eligible to claim an exemption from U.S. taxation under the terms of tax treaties between their home countries and the U.S (see Publication 901 for more information on U.S. treaties).
For each tax year that a nonresident alien visitor is present in the U.S. under an appointment at SAO, the individual will receive a Form 1042S from the Smithsonian (by March 31st). This form will show the amount paid to you and the amount withheld for taxes during the previous tax year. Before June 15th each year, nonresident alien visitors must file an income tax return form 1040NR or 1040NR-EZ (check to see if you meet the qualifications to file the EZ form) for the prior tax year. It is important to point out, however, that the IRS will not allow you to claim income tax deductions if you do not file an income tax return by the deadline. The IRS Publication 519, U.S. Tax Guide for Aliens, may be obtained from the IRS by calling 1-800-829-3676, or from the IRS website. The form 1042S for the final year of an appointment will be sent to the forwarding address on file with your division administrator.
Note that all nonresident aliens in the U.S. on F or J visas are also required to submit IRS Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition with their tax return, even if they received no U.S. source income. Nonresidents who take advantage of tax treaty benefits are required to submit Form 8833, Treaty-Based Return Position Disclosure. You may also be required to submit additional forms and/or schedules, which are identified in the IRS instructions.
The substantial presence test is a mathematical calculation used to determine when a nonresident alien visitor has spent enough days in the U.S. to be considered a resident alien for tax purposes. This is a determination for tax purposes only, and does not affect a visitor’s immigration status. This strict mathematical formula counts the number of days of presence in the United States over a specific number of years depending on the type of visa which you hold. You will be asked to provide SAO with information about your days of presence in the U.S. to enable SAO to perform the calculation. If SAO determines that the test is satisfied, you will be treated as a U.S. citizen for tax purposes, which means that SAO does not withhold taxes from your stipend. However, it is your responsibility to determine if you are required to pay estimated Federal, state and or local taxes on a quarterly basis. A PENALTY CAN BE ASSESSED BY THE IRS IF QUARTERLY PAYMENTS SHOULD BE MADE AND ARE OVERLOOKED. Information and forms are available on websites produced by the Internal Revenue Service (IRS) and Massachusetts Department of Revenue (MDOR). Once you pass the substantial presence test, you are considered a U.S. resident for tax purposes.
All fellowship awardees may be subject to additional income taxes imposed by the state in which you reside while at SAO and are required to file a state tax return by April 15th of each year. Please note the difference in due dates of Federal (June 15th) and state (April 15th) income tax returns for international visitors. Additional information can be requested from the Massachusetts Department of Revenue website or by calling 617-887-6367 or, for non-Massachusetts residents, the tax authority of your state of residence.
State taxes are not as high as Federal taxes, and they often follow Federal exemption rules. However, awardees must acquaint themselves with the law of the state in which they reside to determine if they should file as residents or nonresidents since the regulations may differ from Federal regulations. More specifically, although you may be a nonresident of the U.S. for purposes of Federal taxes, you may qualify as a resident of Massachusetts for tax purposes.
Stipend income of U.S. citizens and resident aliens is not considered to be income derived from a trade or business and is not, therefore, subject to social security or self-employment tax. SAO will not withhold Social Security taxes from the stipends of nonresident aliens present in the U.S. on F or J visas and from U.S. citizens and residents because their income is not deemed to be wages.
All U.S. residents (citizens, permanent residents, and individuals who have met the substantial presence test and are residents for tax purposes) who have an ownership interest in or signatory authority over a foreign bank account with an aggregate value of $10,000 at any time during the calendar year are required to file a Report of Foreign Bank and Financial Accounts (FBAR), Form TD F 90-22.1 with the IRS. This form must be filed by June 30 of each year for accounts maintained during the preceding calendar year. This is an information report; no taxes are due in connection with this form. It is imperative that all affected individuals file the FBAR on time; there are significant financial penalties and criminal liability for failure to timely file.
International Visitors: Stipend recipients who are not U.S. citizens or residents for tax purposes will receive a copy of IRS form 1042S and unofficial statement of earnings from SAO, which reports the total amount paid to the recipient during a calendar year and any tax withheld. These forms are mailed by mid-March for the previous tax year.
U.S. Citizens, Resident Aliens, Nonresident Alien Fellows Passing the Substantial Presence Test (U.S. residents for tax purposes): Stipend recipients who are U.S. citizens or residents will not receive an annual IRS tax form (like the W-2 or 1099) because the tax laws do not require withholding on or reporting their stipends. SAO will distribute an unofficial financial statement that outlines all earnings during the previous tax year by the end of March.
Stipend awards are considered taxable income, and you are responsible for including your award in your income tax return for each full or partial tax year during which you are on an SAO appointment. If you will receive your payments by direct deposit, your bank records may help you to document the payments made during each year.
For all Fellows: If you enroll in one of the health insurance plans through the Smithsonian Office of Fellowships and have the monthly premiums deducted from your award, Christine Crowley in the Fellowship Program Office can assist with documenting how much was paid by SAO for medical coverage, which is still considered part of your taxable award. In addition, payments or reimbursements made for travel expenses (e.g., airfare, hotel, meals, and conference fees) must be adequately documented with receipts in a timely manner; if not, the payments may be included in the amount of your taxable award.
The Fellowship Program Office at CfA will assist you, if needed, to ensure the information you report on your income tax return is accurate. Please contact Christine Crowley, Fellowship Program Coordinator, if you need further assistance at 617-495-7103.
Federal: IRS 1040 or 1040NR forms are due by June 15th.
State: Massachusetts Resident or Nonresident forms are due by April 15th.
U.S. Citizens, Permanent Residents, and U.S. Residents for Tax Purposes:
Federal: IRS 1040 or 1040NR forms are due by April 15th.
State: Massachusetts Resident or Nonresident forms are due by April 15th.
Helpful Web Resources: